Zarina Corp. signed a new installment note on January 1, 2018, and deposited the proceeds of $15,000 in its bank account. The note has a two-year term, compounds 4 percent interest annually, and requires an annual installment payment on December 31. Zarina Corp. has a March 31 yearend and adjusts its accounts quarterly. Round calculations to the nearest dollar. Required: 1. Use an online application, such as the loan calculator with annual payments at mycalculators.com, to generate an amortization schedule. Enter that information into an amortization schedule with the following headings: Year, Beginning Notes Payable, Interest Expense, Repaid Principal on Notes Payable, and Ending Notes Payable. 2. Prepare the journal entry on January 1, 2018. 3. Prepare the adjusting journal entry to accrue interest on March 31, 2018. 4. Assuming the journal entry from requirement 3 also is recorded on June 30, September 30, and December 31, 2018, prepare the journal entry to record the first annual installment payment on December 31, 2018. 5. Calculate the amount of interest expense that should be accrued for the quarter ended March 31, 2019.
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016,
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much did The Home Depo
> Complete this case, available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to capture transactions and use cell linking to prepare an end-of-period trial balance.
> Complete this case, available online in the Connect eBook. By completing this case, you will learn to identify changes in spreadsheet values and infer the underlying transactions responsible for those changes.
> Mike Lynch is the manager of an upstate New York regional office for an insurance company. As the regional manager, his pay package includes a base salary, commissions, and a bonus, when the region sells new policies in excess of its quota. Mike has been
> Read the following excerpt from a complaint filed by the Securities and Exchange Commission against WorldCom(posedonline at http://www.sec.gov/litigation/complaints/comp17829.htm). 1. When a company incurs a cost, its accountants have to decide whether
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation.) Required: 1. How much did The Home Depo
> On December 1, 2018, your company borrowed $15,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2019, $2,000; 2020, $3,000; 2021, $4,000; and 2022, $6,000. Show how t
> What three types of objectives are the focus of internal control?
> Complete this case involving Elizabeth Arden, available online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to capture the accounting equation effects of basic transactions.
> Complete this case, available online in the Connect eBook, which involves identifying flaws in a company’s balance sheet.
> You work as an accountant for a small land development company that desperately needs additional financing to continue in business. The president of your company is meeting with the manager of a local bank at the end of the month to try to obtain this fi
> In the world of financial fraud, a “Ponzi scheme” is famous. Here is the story behind how the scam got its name. Charles Ponzi started the Security Exchange Company on December 26, 1919. He thought he had discovered a way to purchase American stamps in a
> As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (See S1-3 in Chapter 1 for a descr
> Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B. (Note: Fiscal 2106 for The Home Depot runs from February 1, 2016, to January 29, 2017. Fiscal 2016 for Lowe’s runs from January 30, 2016, to February 3, 2017. See
> Refer to the financial statements of The Home Depot in Appendix A at the end of this book. (Note: Fiscal 2016 for The Home Depot runs from February 1, 2016, to January 29, 2017. See S1-1 for further explanation of its fiscal periods.) Required: 1. What
> Complete this case involving Electronic Arts, which your instructor may access from and make available to you online in the Connect eBook. By completing this case, you will learn to use a spreadsheet to prepare a balance sheet and income statement. Detai
> On September 30, Ashley and Jason started arguing about who is better off. Jason said he was better off because he owned a video game console that he bought last year for $250. He figures that, if needed, he could sell it to a friend for $180. Ashley arg
> Refer to M10-3. Prepare the journal entry or entries that Lightning would use to record the payroll. Include both employee and employer taxes. Data from M10-3: Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll
> Assume you are the president of APEC Aerospace Corporation. At the end of the first year of operations (December 31), the following financial data for the company are available: Required: 1. Prepare an income statement for the year ended December 31. 2
> What aspect(s) of the Sarbanes-Oxley Act might allow honest employees to prevail?
> The following table shows three cases, each with one missing element. Required: Use the bond calculator at www.fncalculator.com to determine the missing element for each case. Assume simple annual compounding and round to the nearest dollar or whole pe
> Marshall Corporation purchased equipment and in exchange signed a three-year promissory note. The note requires Marshall to make equal annual payments of $20,000 at the end of each of the next three years. Marshall has other promissory notes that charge
> Southtown Corporation purchased equipment and in exchange signed a two-year promissory note. The note requires Southtown to make a single payment of $100,000 in two years. Southtown has other promissory notes that charge interest at the annual rate of 6
> After incurring a serious injury caused by a manufacturing defect, your friend has sued the manufacturer for damages. Your friend received three offers from the manufacturer to settle the lawsuit: (1) receive an immediate cash payment of $100,000, (2) re
> You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have is shown here. The word high refers to the top third of the industry; average is the middle third; low is the bottom third. Required
> The financial statements for Thor and Gunnar companies are summarized here: These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit
> Mattel and Hasbro are the two biggest makers of games and toys in the world. Mattel sells over $5.6 billion of products each year while annual sales of Hasbro products exceed $5 billion. Compare the two companies as a potential investment based on the fo
> A condensed income statement for Southwest Airlines and a partially completed vertical analysis follow. Required: 1. Complete the vertical analysis by computing each line item (a)–(f) as a percentage of sales revenues. Round to the ne
> Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $50,000 but that employee income taxes totaling $7,000 and FICA taxes totaling
> A condensed balance sheet for Southwest Airlines and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each line item (a)–(c) as a percentage of total assets. Round t
> Use the data given in PB13-1 for Tiger Audio. Required: 1. Compute the gross profit percentage in the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the
> What aspect(s) of the Sarbanes-Oxley Act might reduce opportunities for fraud?
> Tiger Audio declared and paid a cash dividend of $5,525 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Required: 1. Complete the two final columns shown beside each ite
> Refer to PB12-4. Required: Complete requirements 1 and 2 using the direct method. Dive In Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement, as well as add
> Refer to the information in PB12-2. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. The income statement and selected balance sheet information for Calendars Incorporated for
> Dive In Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement, as well as additional information, are presented below. Additional Data: a. Rent is paid in advanc
> Audio City, Inc., is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below: Additional Data: a.
> The income statement and selected balance sheet information for Calendars Incorporated for the year ended December 31 are presented below Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indire
> For each of the following transactions, indicate whether operating (O), investing (I), or financing activities (F) are affected and whether the effect is a cash inflow (+) or outflow (−). Use (NE) if the transaction has no effect on cas
> For each of the following situations, indicate whether it represents an accounting error and explain why it is or is not an error. Also state whether a trial balance would indicate that an error exists for each situation. a. Cash received from a custome
> Two music companies reported the following in their financial statements: Required: 1. Compute the 2018 ROE for each company (express ROE as a percentage rounded to one decimal place). Which company appears to generate greater returns on stockholders&a
> Carlos Company had the following stock outstanding and Retained Earnings at December 31, 2018: On December 31, 2018, the board of directors is considering the distribution of a cash dividend to the common and preferred stockholders. No dividends were de
> At December 31, the records of Seacrest Enterprises provided the following selected and incomplete data: Required: 1. Complete the following: Shares issued . Shares outstanding . 2. The balance in Additional Paid-In Capital would be $ . 3. Earnings p
> What aspect(s) of the Sarbanes-Oxley Act might counteract the incentive to commit fraud?
> Yougi Corp. is an animation studio that issued the following recent press release: Required: 1. Prepare any journal entries that Yougi Corp. should make on the four dates mentioned in the press release. 2. What two requirements would the board of dire
> Whyville Corporation obtained its charter from the state in January that authorized 500,000 shares of common stock, $1 par value. During the first year, the company earned $58,000, declared no dividends, and the following selected transactions occurred i
> Assume the same facts as PB10-6, but now assume that Methodical uses the simplified effectiveinterest bond amortization method, as shown in Chapter Supplement 10C. Required: 1. Prepare a bond amortization schedule. 2. Give the journal entry to record
> Refer to PB10-6. Assume Methodical uses the effective-interest bond amortization method. Required: 1. Prepare a bond amortization schedule. 2. Give the journal entry to record the bond issue. 3. Give the journal entries to record the interest payments
> On January 1, 2018, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4
> Refer to M10-20. Welton Corp. established the note on the first day of its fiscal year and will fully repay the note by the end of year 3 on its December 31 fiscal year-end. Prepare Welton Corp.’s journal entries on (a) January 1, Year 1; (b) December 31
> AMC Entertainment, Inc., owns and operates movie theaters worldwide. Assume the company issued 4 percent bonds at their $53,000,000 face value and then used all of these cash proceeds to retire bonds with a stated interest rate of 6 percent. At that time
> Marshalls Corporation completed a $500,000, 7 percent bond issue on January 1, 2018. The bonds pay interest each December 31 and mature 10 years from January 1, 2018. Required: For each of the three independent cases that follow, provide the amounts t
> Sandler Company completed the following two transactions. The annual accounting period ends December 31. a. On December 31, calculated the payroll, which indicates gross earnings for wages ($260,000), payroll deductions for income tax ($28,000), payroll
> Using data from PB10-1, complete the following requirements. Required: 1. Prepare journal entries for each of the transactions through August 1. 2. Prepare any adjusting entries required on December 31. 3. Show how all of the liabilities arising fr
> Why would managers misrepresent the financial results of their companies?
> Tiger Company completed the following transactions. The annual accounting period ends December 31 Required: 1. For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects (+ for increase, − for
> The following transactions and adjusting entries were completed by a local delivery company called Fast Delivery. The company uses straight-line depreciation for delivery vehicles, double-declining-balance depreciation for buildings, and straight-line am
> Rudy’s Restaurant Company (RRC) entered into the following transactions during a recent year. Required: 1. Analyze the accounting equation effects and record journal entries for each of the transactions. 2. For the tangible and intan
> During the current year, Rayon Corporation disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: The machines were disposed of in the following ways: a. Machine A: Sold on January 2 for $33,500 c
> At the beginning of the year, Oakmont Company bought three used machines from American Manufacturing, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately
> Access an online loan calculator with annual payments, such as the one at mycalculators.com, to produce an amortization schedule for Welton Corp.’s installment note that has original principal of $25,000, interest of 6 percent compounded annually, and a
> J. M. Smucker is well known for its fruit jams and Seneca Foods Corporation is the company behind Green Giant canned vegetables. To evaluate their ability to collect on credit sales, consider the following rounded information in their annual reports (amo
> Elite Events Corporation has provided event planning services for several years. The company has been using the percentage of credit sales method to estimate bad debts but switched at the end of the first quarter to the aging of accounts receivable metho
> Stinson Company recently agreed to loan an employee $100,000 for the purchase of a new house. The loan was executed on May 31, 2018, and is a one-year, 6 percent note, with interest payments required on November 30, 2018, and May 31, 2019. Stinson issues
> Xerox Corporation is the company that made the photocopier popular, but since then has grown a new business related to business process outsourcing. It recently disclosed the following information concerning the Allowance for Doubtful Accounts on its For
> Chipman Sofware recently reported the following amounts in its unadjusted trial balance at its year-end: Required: 1. Chip man uses ¼ of 1 percent of sales to estimate its Bad Debt Expense for the year. Prepare the adjusting journal entr
> (Supplement 5A) What are the arguments for and against replenishing all petty cash funds at the end of each accounting period?
> Spears & Cantrell announced inventory had been overstated by $30 at the end of its second quarter. The error wasn’t discovered and corrected in the company’s periodic inventory system until after the end of the thi
> Using the information in PB7-1, calculate the cost of goods sold and ending inventory for Mojo Industries assuming it applies the LIFO cost method perpetually at the time of each sale. Compare these amounts to the periodic LIFO calculations in requiremen
> Amazon.com reported the following amounts in its financial statements (in millions): Required: 1. Determine the inventory turnover ratio and average days to sell inventory for 2015 and 2014. Round to one decimal place. 2. Comment on any changes in the
> Mondetta Clothing prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to evaluate the net realizable value of its ending inventory. The preliminary income statement follows: Assum
> Refer to M10-18. Prepare CCC’s required journal entries on (a) January 1, 2018; (b) December 31, 2018; (c) December 31, 2019; (d) December 31, 2020; and (e) December 31, 2021. Data from M10-18: The following amortization schedule indi
> Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the foll
> Sigfusson Supplies reported beginning inventory of 100 units, for a total cost of $2,000. The company had the following transactions during the month: Required: 1. Prepare the journal entries that would be recorded using a periodic inventory system. 2
> Emily’s Greenhouse Corporation is a local greenhouse organized 10 years ago as a corporation. The bookkeeper prepared the following statement at year-end (assume that all amounts are correct, but note the incorrect format): Required:
> Sky Communcations (SKY) usually sells a cell phone for $320 plus 12 months of cellular service for $480. SKY has a special, time-limited offer in which it gives the phone for free and sells the 12 months of cellular service for $420. Each phone costs SKY
> Larry’s Building Supplies (LBS) is a local hardware store. LBS uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $224,350). $500,000 b. Received
> Use the information in PB6-1 to complete the following requirements. Required: 1. For each of the events (a) through (c), indicate the amount and direction of the effect (+ for increase, − for decrease, and NE for no effect) on SSG i
> Define restricted cash and indicate how it should be reported on the balance sheet
> If you deposit $1,000 at the end of each period for 10 interest periods and you earn 8 percent interest, how much would you have at the end of period 10? Use a convenient format to display your computations and round to the nearest dollar.
> The transactions listed below are typical of those involving Southern Sporting Goods (SSG) and Sports R Us (SRU). SSG is a wholesale merchandiser and SRU is a retail merchandiser. Assume all sales of merchandise from SSG to SRU are made with terms n/30,
> Service World maintains a petty cash fund. The fund custodian encountered the following events. a. The fund was established when a check for $300 was cashed and deposited into a locked cash box. b. An employee submitted a receipt for a customer deliver
> The following amortization schedule indicates the interest and principal that Chip’s Cookie Corporation (CCC) must repay on an installment note established January 1, 2018. CCC has a December 31 year-end and makes the required annual pa
> The September bank statement and cash T-account for Terrick Company follow: There were no deposits in transit or outstanding checks at August 31. Required: 1. Identify and list the deposits in transit at the end of September. 2. Identify and list th
> The bookkeeper at Tony Company has asked you to prepare a bank reconciliation as of February 29. The February bank statement and the February T-account for cash showed the following (summarized): Tony Company’s bank reconciliation at t
> The following procedures are used by Complete Wholesale Incorporated. a. All sales are made on account, with each sale being indicated on a sequentially numbered sales invoice. b. Customer payments are received in the mail by the office receptionist, w
> Learn to Play, Inc., is a one-person company that provides private piano lessons. Its unadjusted trial balance at December 31, 2018, follows, along with information about selected accounts. Required: 1. Calculate the (preliminary) unadjusted net income
> Indicate the accounting equation effects (amount and direction) of each adjusting journal entry. Use + for increase, − for decrease, and NE for no effect. Provide an appropriate account name for any revenue and expense effects. Data f
> Cactus Company’s annual accounting year ends on June 30. Assume it is now June 30 and all of the entries except the following adjusting journal entries have been made: a. The company earned service revenue of $2,000 on a special job that was completed J
> Regis Corporation operates hair salons under various brand names including Supercuts, Mia & Maxx, and Style America. The following is a simplified list of accounts and amounts (in millions) reported in the company’s accounts for the
> The following items present a sample of business activities involving Dry Cleaner Corporation (DCC) for the year ended December 31. DCC provides cleaning services for individual customers and for employees of several large companies in the city. Dec 1
> Define cash and cash equivalents and indicate the types of items that should be reported as cash and cash equivalents.
> Jessica Pothier opened FunFlatables on June 1. The company rents out moon walks and inflatable slides for parties and corporate events. The company also has obtained the use of an abandoned ice rink located in a local shopping mall, where its rental prod
> On January 1, 2018, Buchheit Enterprises reported $95,000 in a liability called “Bonds Payable, Net.” This liability related to a $100,000 bond with a stated interest rate of 5 percent that was issued when the market interest rate was 6 percent. Assuming
> Robin Harrington established Time Definite Delivery on January 1. The following transactions occurred during the company’s most recent quarter. a. Issued common stock for $80,000. b. Provided delivery service to customers, receiving $16,000 in cash and
> Abercrombie & Fitch Co. (ANF) is a specialty retailer of casual apparel. The following is a series of accounts for ANF. The accounts are listed alphabetically and numbered for identification. Following the accounts is a series of transact
> Starbucks is a coffee company—a big coffee company. During a 10-year period, the number of Starbucks locations in China grew from 24 to over 1,000. The following is adapted from Starbucks’s annual report for the year e
